IRS Tax News

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  • 21 Sep 2020 3:51 PM | Anonymous

    WASHINGTON – The Internal Revenue Service today issued final regulations that provide guidance for decedents’ estates and non-grantor trusts clarifying that certain deductions of such estates and non-grantor trusts are not miscellaneous itemized deductions.

    The Tax Cuts and Jobs Acts (TCJA) prohibits individuals, estates, and non-grantor trusts from claiming miscellaneous itemized deductions for any taxable year beginning after Dec. 31, 2017, and before Jan. 1, 2026.

    Specifically, the final regulations clarify that the following deductions are allowable in figuring adjusted gross income and are not miscellaneous itemized deductions:

    • Deductions for costs paid or incurred in connection with the administration of the estate or trust which would not have been incurred if the property were not held in such estate or non-grantor trust.
    • The deduction concerning the personal exemption of an estate or non-grantor trust.
    • The distribution deductions for trusts distributing current income.
    • The distribution deductions for trusts accumulating income.

    In addition, the final regulations provide guidance on determining the character and amount of, as well as the manner for allocating, excess deductions that beneficiaries succeeding to the property of a terminated estate or non-grantor trust may claim on their individual income tax returns.

    For more information about this and other TCJA provisions, visit IRS.gov/taxreform.

  • 21 Sep 2020 2:46 PM | Anonymous

    WASHINGTON — The Treasury Department and the Internal Revenue Service today released the last set of final regulations implementing the 100% additional first year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.

    The 100% additional first year depreciation deduction was created in 2017 by the Tax Cuts and Jobs Act and generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

    The deduction applies to qualifying property (including used property) acquired and placed in service after Sept. 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property.

    Additionally, the final regulations provide rules for consolidated groups and rules for components acquired or self-constructed after Sept. 27, 2017, for larger self-constructed property on which production began before Sept. 28, 2017. 

    For details on claiming the deduction, see the final regulations and the instructions to Form 4562, Depreciation and Amortization (Including Information on Listed Property).

    In addition, the Treasury Department and the Internal Revenue Service plan to issue procedural guidance for taxpayers to opt to apply the final regulations in prior taxable years or to rely on the proposed regulations issued in Sept. 2019.

    For more information about this and other TCJA provisions, visit IRS.gov/taxreform

  • 17 Sep 2020 3:03 PM | Anonymous

    WASHINGTON — Victims of the Oregon wildfires and straight-line winds that began on Sept. 7 now have until Jan. 15, 2021 to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

    The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. Currently this includes  Clackamas, Douglas, Jackson, Klamath, Lane, Lincoln, Linn and Marion counties in Oregon, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

    The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 7, 2020. As a result, affected individuals and businesses will have until Jan. 15, 2021, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2019 return due to run out on Oct. 15, 2020, will now have until Jan. 15, 2021, to file. The IRS noted, however, that because tax payments related to these 2019 returns were due on July 15, 2020, those payments are not eligible for this relief.

    The Jan. 15, 2021 deadline also applies to quarterly estimated income tax payments due on Sept. 15, 2020, and the quarterly payroll and excise tax returns normally due on Nov. 2, 2020. It also applies to tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on Nov. 16, 2020. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2019 extensions run out on Oct. 15, 2020.    

    In addition, penalties on payroll and excise tax deposits due on or after Sept. 7 and before Sept. 22, will be abated as long as the deposits are made by Sept. 22, 2020.

    The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

    The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

    In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

    Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2020 return normally filed next year), or the return for the prior year (2019). Be sure to write the FEMA declaration number – 4562 − for the wildfires in Oregon on any return claiming a loss. See Publication 547 for details.

    The tax relief is part of a coordinated federal response to the damage caused by  wildfires and straight-line winds and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

  • 17 Sep 2020 2:40 PM | Anonymous

    Notice 2020-73 announces that the Department of the Treasury and the Internal Revenue Service intend to amend the regulations under section 987 to defer the applicability date of the final regulations under section 987, as well as certain related final regulations, by one additional year.  The applicability date of these regulations has been deferred under prior notices to taxable years beginning after December 7, 2020.  The Treasury Department and the IRS intend to amend §§1.861-9T, 1.985-5, 1.987-11, 1.988-1, 1.988-4, and 1.989(a)-1 of the 2016 final regulations and §§1.987-2 and 1.987-4 of the 2019 final regulations (the related 2019 final regulations) to provide that the 2016 final regulations and the related 2019 final regulations apply to taxable years beginning after December 7, 2021.  The Notice also states that taxpayers may rely on certain related proposed regulations that cross-reference temporary regulations which have expired.

    Notice 2020-73 will be in IRB:  2020-41, dated October 5, 2020.

  • 17 Sep 2020 11:23 AM | Anonymous

    WASHINGTON –The Internal Revenue Service today released a state-by-state breakdown of the roughly nine million people receiving a special mailing this month encouraging them to see if they’re eligible to claim an Economic Impact Payment. 

    The IRS will mail the letters to people who typically aren’t required to file federal income tax returns but may qualify for an Economic Impact Payment. The letter urges recipients to visit the special Non-Filers: Enter Payment Info tool on IRS.gov before the Oct. 15 deadline to register for an Economic Impact Payment. 

    “The IRS continues to work hard to reach people eligible for these payments,” said IRS Commissioner Chuck Rettig. “These mailings are the latest step by the IRS to reach as many people as possible for these important payments. We are releasing this state-by-state information so that state and local leaders and organizations can better understand the size of this population in their communities and assist them in claiming these important payments. Time is running out to claim a payment before the deadline.” 

    These letters are part of a final stage of the IRS’s sweeping outreach and public awareness campaign on the Economic Impact Payments that began in March. These efforts included IRS outreach to thousands of partner groups across the nation, including partner groups serving underserved communities, people experiencing homelessness, and those whose primary language isn’t English. 

    So far, more than 7 million people have already used the Non-Filers tool to register for a payment. 

    This month’s letters, delivered from an IRS address, are being sent to people who haven’t filed a return for either 2018 or 2019. Based on an internal analysis, these are people who don’t typically have a tax return filing requirement because they appear to have very low incomes based on Forms W-2 and 1099, and other third-party statements available to the IRS. 

    The breakdown below shows the number of individuals in each state to whom the IRS is sending a letter. 

    The letter urges the recipient to register at IRS.gov by Oct. 15 in order to receive a payment by the end of the year. Individuals can receive up to $1,200, and married couples can receive up to $2,400. People with qualifying children under age 17 at the end of 2019 can get up to an additional $500 for each qualifying child. 

    The letter, officially known as IRS Notice 1444-A, is written in English and Spanish and includes information on eligibility criteria. If they haven’t done so already, this letter urges eligible individuals to register using the free Non-Filers: Enter Payment Info tool, available in English and Spanish and only on IRS.gov. To help address fraud concerns, a copy of the letter is available on IRS.gov. 

    The IRS cautions that receiving a letter is not a guarantee of eligibility. An individual is likely eligible for an Economic Impact Payment if they:

    • are a U.S. citizen or resident alien;
    • have a work-eligible Social Security number; and
    • can’t be claimed as a dependent on someone else’s federal income tax return.For more information on eligibility requirements, see the Economic Impact Payment eligibility FAQs on IRS.gov. 

    The registration deadline for non-filers to claim an Economic Impact Payment through the Non-Filers tool is Oct. 15, 2020. People who are eligible should not wait to receive a letter and should register now. Alternatively, people can wait until next year and claim the recovery rebate credit on their 2020 federal income tax return by filing in 2021. 

    The IRS emphasized that anyone required to file either a 2018 or 2019 tax return should file the tax return and not use the Non-Filers tool. That tool is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are experiencing homelessness. 

    Those unable to access the Non-Filers tool may submit a simplified paper return following the procedures described in the Economic Impact Payment FAQs on IRS.gov.

    People can qualify for a payment, even if they don’t work or have no earned income. But low- and moderate-income workers and working families eligible to receive special tax benefits, such as the Earned Income Tax Credit or Child Tax Credit, cannot use this tool. They will need to file a regular tax return as soon as possible. The IRS will use their tax return information to determine and issue any Economic Impact Payment for which they are eligible.

    Anyone using the Non-Filers tool can speed up the arrival of their payment by choosing to receive it by direct deposit. Those not choosing this option will get a check. 

    Beginning two weeks after they register, people can track the status of their payment using the Get My Payment tool, available only on IRS.gov. 

    State

    State Postal Code

    Total Number of EIP Payments

    Armed Forces Americas

    AA

    522

    Armed Forces Non-Americas

    AE

    3,096

    Alabama

    AL

    148,242

    Armed Forces Pacific

    AP

    2,177

    Alaska

    AK

    30,807

    Arizona

    AZ

    239,037

    Arkansas

    AR

    91,386

    California

    CA

    1,186,896

    Colorado

    CO

    177,502

    Connecticut

    CT

    89,458

    Delaware

    DE

    32,875

    District of Columbia

    DC

    33,964

    Florida

    FL

    567,425

    Georgia

    GA

    348,631

    Hawaii

    HI

    48,767

    Iowa

    IA

    71,382

    Idaho

    ID

    40,943

    Illinois

    IL

    309,972

    Indiana

    IN

    150,154

    Kansas

    KS

    69,595

    Kentucky

    KY

    117,136

    Louisiana

    LA

    159,575

    Maine

    ME

    32,346

    Maryland

    MD

    192,153

    Massachusetts

    MA

    187,768

    Michigan

    MI

    270,590

    Minnesota

    MN

    115,914

    Mississippi

    MS

    86,669

    Missouri

    MO

    159,077

    Montana

    MT

    30,977

    Nebraska

    NE

    38,201

    Nevada

    NV

    94,472

    New Hampshire

    NH

    29,680

    New Jersey

    NJ

    216,145

    New Mexico

    NM

    72,333

    New York

    NY

    537,726

    North Carolina

    NC

    245,623

    North Dakota

    ND

    19,596

    Ohio

    OH

    283,194

    Oklahoma

    OK

    123,473

    Oregon

    OR

    131,647

    Pennsylvania

    PA

    276,066

    Rhode Island

    RI

    24,686

    South Carolina

    SC

    142,382

    South Dakota

    SD

    19,391

    Tennessee

    TN

    171,065

    Texas

    TX

    796,525

    Utah

    UT

    69,140

    Vermont

    VT

    13,665

    Virginia

    VA

    205,600

    Washington

    WA

    203,978

    West Virginia

    WV

    27,788

    Wisconsin

    WI

    111,426

    Wyoming

    WY

    14,506

    Total

          

    8,863,344

    For more information on the Economic Impact Payment, including updated answers to frequently asked questions and other resources, visit IRS.gov/coronavirus.

  • 16 Sep 2020 12:10 PM | Anonymous

    File and pay electronically, request direct deposit for refunds

    WASHINGTON – The Internal Revenue Service today reminds taxpayers who filed an extension that the Oct. 15 due date to file 2019 tax returns is approaching. Taxpayers should complete their tax returns and file on or before the Oct. 15 deadline.

    Convenient electronic filing options, including IRS Free File, are still available. Taxpayers and tax professionals should continue to use electronic options to support social distancing and speed the processing of tax returns, refunds and payments.

    Although Oct. 15 is the last day for most people to file, some taxpayers may have more time. They include:

    • Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.
    • Taxpayers in federally declared disaster areas who already had valid extensions. For details, see the disaster relief page on IRS.gov.

    Taxpayers who did not request an extension and have yet to file a 2019 tax return can generally avoid additional penalties and interest by filing the return as soon as possible and paying any taxes owed.

    Choose direct deposit for refunds
    The safest and fastest way for taxpayers to get their refund is to have it electronically deposited into their bank or other financial account. Taxpayers can use direct deposit to deposit their refund into one, two or even three accounts. Direct deposit is much faster than waiting for a paper check to arrive in the mail.

    After filing, use the Where's My Refund? tool on IRS.gov or download the IRS2Go mobile app to track the status of a refund.

    Schedule federal tax payments electronically
    Taxpayers who filed an extension can file now and schedule their federal tax payments up to the Oct. 15 due date. They can pay online, by phone or with their mobile device and the IRS2Go app. When paying federal taxes electronically taxpayers should remember:

    • Electronic payment options are the optimal way to make a tax payment.
    • They can pay when they file electronically using tax software online. If using a tax preparer, taxpayers should ask the preparer to make the tax payment through an electronic funds withdrawal from a bank account.
    • IRS Direct Pay allows taxpayers to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance.
    • Taxpayers can choose to pay with a credit card, debit card or digital wallet option through a payment processor. No fees go to the IRS.
    •  The IRS2Go app provides the mobile-friendly payment options, including Direct Pay and Payment Provider payments on mobile devices.
    • Taxpayers may also enroll in the Electronic Federal Tax Payment System and have a choice of paying online or by phone by using the EFTPS Voice Response System.
    • Taxpayers can go to IRS.gov/account to securely access information about their federal tax account. They can view the amount they owe, access their tax records online, review their payment history and view key tax return information for the most recent tax return as originally filed.

    Economic Impact Payments-Non-Filers can still get one; must act by Oct. 15
    Though most Americans − more than 160 million in all − have already received their Economic Impact Payments, the IRS reminds anyone with little or no income who is not required to file a tax return that they may be eligible to receive an Economic Impact Payment.

    Available in both English and Spanish, the Non-Filers tool on IRS.gov is designed for people with incomes typically below $24,400 for married couples, and $12,200 for singles. This includes couples and individuals who are experiencing homelessness. People must enter their information by Oct. 15 to get a payment this year.

    People can qualify for a payment, even if they don’t work or have no earned income. But low- and moderate-income workers and working families eligible to receive special tax benefits, such as the Earned Income Tax Credit or Child Tax Credit, cannot use this tool. They will need to file a regular return as soon as possible. The IRS will use their tax return information to determine and issue any EIP for which they are eligible.

    IRS.gov assistance
    Taxpayers may find answers to many of their questions using the Interactive Tax Assistant (ITA), a tax law resource that works using a series of questions and responses. IRS.gov has answers for Frequently Asked Questions. The IRS website has tax information in: Spanish (Español); Chinese (中文); Korean (한국어); Russian (Pусский); Vietnamese (Tyng Việt); and Haitian Creole (Kreyòl ayisyen). Go to IRS.gov/payments for electronic payment options.

  • 16 Sep 2020 11:33 AM | Anonymous

    WASHINGTON – The Internal Revenue Service continues to look for ways to assist taxpayers affected by the COVID-19 pandemic.  As part of that effort, the IRS reminds taxpayers and tax practitioners of the procedures for requesting expedited handling of requests for letter rulings under Rev. Proc. 2020-1, 2020-1 I.R.B. 1 (Jan. 2, 2020).

    As set forth in Rev. Proc. 2020-1, the IRS ordinarily processes requests for letter rulings in the order that they were received.  A taxpayer with a compelling need to have a request processed more quickly may request expedited handling.  The request for expedited handling must be made in writing, preferably in a separate letter submitted with the letter ruling request.  Requests for expedited handling are granted at the discretion of the IRS and typically involve a factor outside of the taxpayer’s control that creates a real business need to obtain a letter ruling before a certain date in order to avoid serious business consequences.  Requests for expedited handling should be submitted as promptly as possible after the taxpayer has become aware of the deadline or compelling business need. 

    The COVID-19 pandemic is a factor outside of the taxpayer’s control that can support a request for expedited handling under Rev. Proc. 2020-1. As a result, and consistent with Executive Order 13924 of May 19, 2020, taxpayers are encouraged to seek expedited handling if they face a compelling need related to COVID-19.  Such requests will be handled as provided in Rev. Proc. 2020-1.

    More information on the procedures for requesting expedited handling is provided in Section 7.02(4) of Rev. Proc. 2020-1.  In addition, Rev. Proc. 2020-29, 2020-21 I.R.B. 859 (May 18, 2020), sets forth procedures for the electronic submission of letter ruling requests.

  • 15 Sep 2020 4:06 PM | Anonymous

    The IRS has issued an advance copy of TD 9914 on Eligible Terminated S Corporations.


  • 15 Sep 2020 3:48 PM | Anonymous

    WASHINGTON — The Internal Revenue Service today issued final regulations for taxpayers who claim the rehabilitation credit. 

    The Tax Cuts and Jobs Act (TJCA) amended the rehabilitation credit so that taxpayers now claim the rehabilitation credit over a five-year period.  The TCJA amendments generally apply to a taxpayer’s qualified rehabilitation expenditures paid or incurred after Dec. 31, 2017. 

    Taxpayers, however, may claim the credit all in one year under pre-TCJA rules for projects that qualify under a transition rule. The transition rule allows taxpayers to use the prior law if the project meets these conditions:

    • The taxpayer owns or leases the building on January 1, 2018 and the entire period thereafter
    • The 24- or 60-month period selected for the substantial rehabilitation test begins by June 20, 2018

    The final regulations require taxpayers to determine the rehabilitation credit amount in the year they place the building into service and allocate that amount ratably over the five-year period.

    The final regulations also include a rule to coordinate the TCJA amendments with the special rules for the investment credit, of which the rehabilitation credit is part.  Finally, the final regulations include examples illustrating how to apply the rules.
     
    Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.

  • 15 Sep 2020 2:22 PM | Anonymous

    Revenue Ruling 2020-20 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.  

    The rates are published monthly for purposes of sections 42, 382, 412, 642, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code. 

    Revenue Ruling 2020-20 will be in IRB:  2020-41, dated October 5, 2020.


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